VAT Categorization
Understanding how to categorize transactions for VAT compliance in The Bahamas.
VAT Categories in The Bahamas
As of 2025, The Bahamas applies these VAT categories:
| Category | Name | Applies To |
|---|---|---|
| Standard (10%) | Standard Rate | Most goods and services |
| Reduced (5%) | Reduced Rate | Hygiene products and medications at licensed food stores (narrow scope — not a general food rate) |
| Zero-Rated (0%) | Zero-Rated | Exports, inter-island shipping |
| Exempt | VAT Exempt | Financial services, education, healthcare, unprepared food at licensed food stores (from April 1, 2026) |
Note: Inter-island shipping remains Zero-Rated in CoralLedger Comply under Value Added Tax Act, 2014 (as amended by the VAT (Amendment) (No. 2) Act, 2021), s. 9, First Schedule Part I.
As of April 1, 2026, unprepared food sold at licensed food stores moved from a reduced/breadbasket rate to VAT Exempt status. This means:
- No VAT is charged on the sale
- No input tax credits can be claimed on related purchases (unlike Zero-Rated supplies)
This affects apportionment calculations for businesses that sell a mix of taxable and exempt supplies. See 2025 VAT Reforms — April 2026 Food Exemption for details.
Categorization Suggestions
CoralLedger Comply provides guided categorization suggestions based on:
Description Analysis
Keywords in transaction descriptions can suggest categories for review:
- "bread", "rice", "flour", "produce", "groceries" → food-related VAT categories
- "hygiene", "soap", "medication", "toothpaste" → reduced-rate or exempt categories
- "export", "shipping to" → 0%
- "insurance premium" → Exempt
Suggestions are prompts only. You must confirm the final VAT category based on the transaction facts and applicable law (including supplier licence status and effective dates where relevant).
Vendor Matching
Previously categorized transactions from the same vendor inform future suggestions.
Industry Rules
Your business industry setting applies sector-specific rules.
CoralLedger Comply provides categorization support, but you remain responsible for the final VAT treatment applied to each transaction, including Value Added Tax Act, 2014 (as amended by the VAT (Amendment) (No. 2) Act, 2021), s. 32 determinations where relevant.
Review and Edit Categories
You can always review and change suggested categories:
- Go to Transactions
- Select the transaction
- Click Edit Category
- Choose the correct VAT category
- Optionally add a note explaining the change
Category Review
We recommend reviewing categorizations:
- Weekly during your first month
- Monthly once patterns are established
- Before generating each VAT return